Mercedes are ready to challenge McLaren for third place when the new Formula One season starts in Melbourne on Sunday, according to the seven-times champion Michael Schumacher.

Mercedes were fourth behind Red Bull, Ferrari and McLaren last year. But Schumacher, 42, said: "Mercedes has taken a huge step forward with this year's car. It is a very performance-orientated car and it has paid off.

"I think this year our realistic possibility is to fight for podiums and if things go very well, maybe to win a race. As for the championship, you have to be careful with this one. I don't think we are prepared and developed for this yet."

Mercedes were initially disappointing in testing in Barcelona but then turned around their times with a stunning finish.

Meanwhile, it was confirmed that the Red Bull head of design, Adrian Newey, turned down an approach from Ferrari early last year. The Red Bull team principal, Christian Horner, said: "It's understandable why any team in F1 would be interested in Adrian but he is very much enjoying life at Red Bull and I'm sure he'll be here for years to come."

Newey said: "I've had offers from Ferrari in the past and I've considered them seriously. But F1 is a people sport, not a marque sport.

"Working for Ferrari just for the sake of working for Ferrari isn't something that I'm interested in."